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Zillow Revises Home Price Forecast: Expect Slower Growth in 2024

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  //house-home.news-articles.net/content/2025/12/2 .. price-forecast-expect-slower-growth-in-2024.html
  Published in House and Home on Sunday, December 28th 2025 at 9:36 GMT by Hartford Courant

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Zillow Adjusts Home Price Forecast: A More Cautious Outlook for 2024 and Beyond

Zillow recently released an update to its home price forecasts, revising expectations across over 400 housing markets in the United States. While a continued appreciation is still predicted, the adjustments signal a more cautious outlook than previously anticipated, reflecting evolving economic conditions and shifting buyer behavior. The revised projections, outlined in their December 2023 analysis, paint a picture of a cooling market that’s unlikely to see the explosive growth experienced during the pandemic era.

The Core Revision: Slower Growth, Not Decline

The most significant takeaway is that Zillow has lowered its expected home price appreciation for 2024. Initially predicting a more robust increase, the revised forecast now anticipates a national average price increase of roughly 3.9% over the next year. This represents a downward adjustment from earlier projections and reflects concerns about persistent high mortgage rates impacting affordability and demand. It's crucial to note that Zillow isn’t forecasting widespread home price declines; rather, they are tempering expectations for continued rapid growth. They also revised their forecast upward slightly for 2023, estimating a 4.7% increase – a testament to the market’s resilience despite challenges.

The Driving Factors Behind the Adjustment

Several key factors contributed to Zillow's recalibrated forecasts. The primary driver is undeniably the elevated mortgage rates. As reported in numerous articles throughout 2023, including those linked within the Courant piece (and further explored by sources like Redfin), these rates have remained stubbornly high, significantly impacting buyer purchasing power. The Federal Reserve’s actions to combat inflation – raising interest rates – directly influence mortgage rates, making homeownership less accessible for many potential buyers. This reduced demand puts downward pressure on price increases.

Beyond interest rates, the article highlights a broader economic context. While inflation has cooled somewhat from its peak in 2022, it remains above the Federal Reserve's target. Concerns about a potential recession, although seemingly averted so far, also contribute to uncertainty and influence buyer sentiment. Consumer confidence, while improving, is still sensitive to economic news.

Inventory levels are another crucial piece of the puzzle. While inventory has improved from the historic lows seen during the pandemic-fueled frenzy, it remains below pre-pandemic levels in many markets. This limited supply continues to provide some support for prices, preventing a significant downturn. However, the improvement in inventory is also contributing to the cooling effect by giving buyers more choices and reducing competition.

Regional Variations: A Tale of Two Markets

Zillow's forecasts aren’t uniform across the country. The company identifies varying degrees of strength and weakness depending on local market dynamics. Markets that experienced particularly rapid price appreciation during the pandemic, such as Boise, Idaho, and Phoenix, Arizona, are expected to see more moderate growth or even slight declines in some areas. These markets were heavily influenced by migration patterns and remote work trends, which have since begun to normalize.

Conversely, other regions, including parts of the Midwest and Southeast, continue to exhibit relative strength due to factors like population growth and a more affordable cost of living. Zillow’s detailed market-by-market breakdown (accessible through their website) allows for granular analysis of these regional differences. The article points out that markets with stronger job growth and continued migration are likely to fare better, while those heavily reliant on pandemic-era trends face greater headwinds.

The Role of New Construction

New construction is also playing a significant role in the housing market landscape. While building activity has slowed somewhat due to higher interest rates impacting developer financing, the ongoing shortage of existing homes means that new builds continue to be absorbed into the market. Increased supply from builders can help moderate price increases and provide more options for buyers.

What This Means for Buyers and Sellers

For potential homebuyers, Zillow’s revised forecast suggests a slightly less frantic buying environment. While prices are still expected to rise, the pace of appreciation is slowing, potentially giving buyers more time to shop around and negotiate. The higher mortgage rates remain a significant barrier, but the prospect of slower price increases could incentivize some buyers who were previously priced out of the market.

Sellers, on the other hand, should adjust their expectations accordingly. The days of multiple offers and bidding wars above asking price are likely over in many areas. While homes are still expected to appreciate in value, sellers may need to be more realistic about pricing and prepared for a longer time on the market. Staging and making necessary repairs will become even more important to attract buyers in a less competitive environment.

Looking Ahead: A Market in Transition

Zillow's updated forecasts reflect a housing market undergoing a significant transition. The era of unsustainable price appreciation is likely over, and the market is settling into a new normal characterized by slower growth, increased inventory, and more balanced negotiations between buyers and sellers. While uncertainties remain regarding the future direction of interest rates and the broader economy, Zillow’s analysis provides valuable insights for navigating this evolving landscape – emphasizing that patience and informed decision-making will be key for both buyers and sellers in the months ahead.

I hope this article effectively summarizes the Courant piece and provides a comprehensive understanding of Zillow's updated home price forecasts.